MARKET WATCH: Crude oil futures dip on reported OPEC output level

Oil prices dropped steeply on the New York and London markets Sept. 30, which analysts largely attributed to a wire service story that the Organization of Petroleum Exporting Countries increased its output levels through higher production from Saudi Arabia and Libya.

Reuters said its survey based on shipping data and information from sources at oil companies, OPEC, and consultants showed OPEC crude supply averaged 30.96 million b/d in September, up from 30.15 million b/d in August.

That output level exceeded OPEC’s own forecast of 29.2 million b/d for its crude output. Reuters said its surveys indicated OPEC’s September output was the highest since November 2012 when OPEC pumped 31.06 million b/d.

In response to reported global oil supplies, US light, sweet crude oil prices plunged more than $3/bbl. In addition, analysts said sluggish Chinese manufacturing statistics also contributed to downward pressure on oil prices.

HSBC reported its China Manufacturing Purchasing Managers’ Index was unchanged at a final reading of 50.2 in September from August, indicating sluggish economic growth. Oil traders and analysts watch China’s economy for possible global oil demand indicators.

US crude inventory

The Energy Information Administration estimated US commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, decreased by 1.4 million bbl for the week ended Sept. 26 compared with the previous week.

At 356.6 million bbl, US crude oil inventories are in the upper half of the average range for this time of year, EIA said in its weekly petroleum status report.

Total motor gasoline inventories decreased by 1.8 million bbl and are in the middle of the average range, EIA said. Finished gasoline inventories increased while blending components inventories decreased last week.

Distillate fuel inventories decreased by 2.9 million bbl and are near the lower limit of the average range for this time of year, EIA said. Propane-propylene inventories rose 400,000 bbl and are above the upper limit of the average range.

Refinery inputs averaged 15.7 million b/d during the week ending Sept. 26, which was 525,000 b/d less than the previous week’s average. Refineries operated at 89.8% of capacity.

Gasoline production decreased last week, averaging over 9 million b/d. Distillate fuel production increased last week, averaging 4.9 million b/d.

Crude oil imports averaged 7.3 million b/d last week, up 414,000 b/d from the previous week. Over the last 4 weeks, crude oil imports averaged about 7.5 million b/d, 6.3% below the same 4-week period last year. Total motor gasoline imports, including both finished gasoline and gasoline blending components, averaged 504,000 b/d and distillate fuel imports averaged 31,000 b/d.

Energy prices

The New York Mercantile Exchange November crude oil contract dipped $3.41 on Sept. 30 to close at $91.16/bbl. The December contract also fell, dropping $3.22 to $90.27/bbl.

The natural gas contract for November decreased 3.3¢ to a rounded $4.12/MMbtu. Meanwhile, the US cash gas price increased for the day despite widespread drops across the energy commodities future prices. Gas at Henry Hub, La., was $4.14/MMbtu, up 12¢.

Heating oil for October delivery fell a rounded 5.7¢ to a rounded $2.65/gal. Reformulated gasoline stock for oxygenate blending for October declined a rounded 11¢ to a rounded $2.59/gal. The October contracts for heating oil and RBOB expired with the close on Sept. 30.

The November ICE contract for Brent crude delivery dropped $2.53, closing at $94.67/bbl, while the December contract was down $2.49 to $95.32/bbl. The ICE gas oil contract for October gave up $9.50 to settle at $805.50/tonne.

The average price for OPEC’s basket of 12 benchmark crudes on Sept. 30 was $94.17/bbl, down 37¢.

Contact Paula Dittrick at paulad@ogjonline.com.

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